# Source Material: Bruce Greenwald on Valuing Franchises

More than one person has written to me about my posts on how Greenwald values a franchise to say:

“Hey! where did get this info?! I’ve read Greenwald’s value investing book and don’t remember any of this!”

I actually got it by reviewing Greenwald lecture videos and PDFs of his slides that various people have posted online. Let me compile a few links for those interested.

First – some of you may not know that there are a lot of his lectures on youtube – just search for his name. But there is one caveat: the audio and/or video quality of some of these is quite bad, awful, just deplorable. But, if this information is important to you, you’ll soldier on and the content will bring a smile to your face when you start to get the big picture. I’m enormously grateful to all who posted anything they had, irrespective of quality.

Try this one for Greenwald talking about franchises. He starts on valuing growth about :46 in and hits the equation bit I talked about shortly after 1:03 (when he starts talking about method #2). Can I make a recommendation? Don’t try to watch the video – you can’t even read the slides! – just listen to what he’s saying. Stream it on your iPhone while you walk the dog, and listen to it 4 or 5 times.

Now of course you want to see some slides that are representative of what he’s probably throwing up in the video. Try these – he even has some example valuations near the end. (And I’m enormously grateful to csinvesting.org for even putting Greenwald onto my radar).

Greenwald Slides from CSinvesting

Finally – maybe these will be helpful – just some notes I took to try to summarize the equation. The only abbreviations you might not get are BB (buybacks) and COC (cost of capital).

Hope these are useful.

## 4 thoughts on “Source Material: Bruce Greenwald on Valuing Franchises”

1. frank says:

Question, on the franchise growth calculation. Where do you get the data for G? What if G (growth %) is greater than R (cost of Capital)?

2. Dave says:

Can you please tell me what the small alphabet d, E, and P stand for?

3. frank – sorry. were you commenting on a different post? i don’t see where i talk about a G. ???

dave – E is earnings, P is price, and d is the % of net income that the company pays out in dividends and buybacks.

4. david says:

this is really good stuff. basically fcf yield plus growth, but no one seems to use it this way.